In the June 13, 2007 Issue:

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Alabama Directs $35.8M to STEM Initiative
Alabama Gov. Bob Riley and lawmakers recently gave the state's Department of Education a substantial boost by increasing the budget for the Alabama Math, Science and Technology Initiative (AMSTI) by two-thirds for fiscal year 2008 – a leading example in science, technology, engineering and math (STEM) education.

Historically, Alabama has ranked low in educational attainment compared to the rest of the country. In 2005, Alabama ranked 47th in the nation in percentage of adults age 25 or older with a bachelor’s degree or higher (see the Nov. 27, 2006 Useful Stats table in the Digest). However, last week, Gov. Riley signed into law a record education budget, investing more funding than ever before in Alabama’s history. AMSTI, the Department of Education’s initiative to improve math and science teaching statewide, will receive $35.8 million, a significant increase from the FY07 appropriation of $22 million.

Created in 2002 as a pilot program, the initiative is similar to one of the proposed goals within the America COMPETES Act, introduced in Congress in March. Schools in Alabama become official AMSTI schools by sending all math and science teachers and administrators to summer institutes where they receive extensive math and science training. Teachers must attend the two-week program for two consecutive summers, and upon completion, they are provided with all of the math and science equipment and materials needed to conduct hands-on training in their classrooms.

The program has proved to be a success throughout the state, and the summer institutes have expanded into 10 regions. According to the Alabama Department of Education, students in AMSTI schools scored higher on the Stanford Achievement Test in math, science and reading on the Alabama High School Graduation Exam, compared to schools with similar demographics that did not participate in the program.

The program’s success is now the focus of a study being conducted by the U.S. Department of Education’s Institute of Education Sciences. The study, The Effectiveness of the Alabama Math, Science, and Technology Initiative, measures the impact of the program on student achievement over 2006-09.

More information about AMSTI is available at: http://www.amsti.org/

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Has the U.S. Been Sidelined in Broadband Revolution?
Should a fall of 11 places in international rankings for broadband penetration be of concern for U.S. policymakers? Expanding broadband access for business and residents has become a key element of many regional development strategies. The Internet has become a key resource for entrepreneurs and small businesses, as well as a necessary ingredient in preparing students for the modern workforce. Widespread broadband use offers many advantages for regional economies, especially in regions that have traditionally lagged in high-tech development, but may now be able to access information and markets that were once beyond their reach.

A recent report from the Organization for Economic Co-operation and Development (OECD) highlighted why state and regional efforts to expand broadband access are becoming vital to sustaining U.S. economic prosperity. SSTI reported on recent examples from two states, West Virginia and Vermont, that were implementing new strategies to expand broadband and wireless Internet access for businesses and individuals (see the May 14, 2007 issue of the Digest).

OECD found, since 2001, the U.S. has fallen from fourth to 15th in national broadband penetration. In the second half of 2006, the U.S. had the second-slowest rate of increase among OECD countries. The rankings, which are based on the number of broadband subscriptions per capita, suggest that the U.S. may fall even farther in the next few years, as countries like Australia and Germany continue to make strong gains.

Earlier this month, Robert McDowell, a commissioner with the Federal Communications Commissions, strongly objected to the OECD rankings system responding to the report at a national broadband policy summit. Challenging their methodology, McDowell holds the OECD research does not account for the variation in the number of individuals per household. Since the OECD data only accounts for the number of broadband subscriptions per capita, countries with more individuals per household are at a disadvantage. [Editor’s note: The U.S. average household size of 2.57 individuals is tied for 11th among the reported countries. The figure is above several nations ranked higher for broadband penetration without taking household size into consideration.]

McDowell notes the OECD report also does not account for the speed of broadband service. National average download speeds vary between 61 mbps in Japan to just 1 mbps in Greece. At 16th, the U.S. currently ranks even lower on average speed of broadband connections than on penetration, but McDowell reports recent successes with fiber-to-the-door network pilot programs suggest that the U.S. may soon be able to improve its high-speed services in many cities.

As an additional observation, McDowell cites alternate recent surveys reporting 43 percent of U.S. households receive broadband service, well above the E.U. average of 23 percent.

The Information Technology and Innovation Foundation (ITIF) recently addressed the commissioner's concerns in a white paper that proposes an alternate set of metrics for estimating the state of national broadband deployment. The ITIF ranking system assigns each OECD country a score based on OECD measurements of broadband subscriptions, the average number of individuals per subscribed household, the average speed of broadband connections, and the average cost of high-speed connections. The U.S. does modestly better in the ITIF rankings than the OECD report, coming in 12th among all OECD countries; however, slow speeds and low adoption rates still appear to place the U.S. at a disadvantage in the information economy.

The ITIF paper makes several recommendations to help pull the U.S. out of its broadband slump. At the national level, they suggest that Congress should exempt broadband services from paying into the Universal Services fund, create federal tax incentive to deploy new networks, and adopt a higher-speed standard for high-speed Internet services. At the state level, ITIF recommends the adoption of statewide video franchise agreements, which would allow broadband services that offer Internet-based video services to bypass the time-consuming process of negotiating local agreements. Since television-over-the-Internet (or IPTV) services are one of the major drivers of expanded fiber-to-the-door services, these statewide franchises could encourage the spread of much faster networks. The paper also advises states to fill in the gaps left by federal broadband studies by collecting and reporting local data about broadband penetration.

Download Accessing Broadband in America: OECD and ITIF Broadband Rankings at: http://www.itif.org/files/BroadbandRankings.pdf

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Wisconsin Early-stage Capital Interventions Lead to Gains in 2006
Like many states, Wisconsin has struggled to attract consistent attention from the national venture capital industry. Capital can be especially difficult to obtain in the state, since entrepreneurs with limited resources are often unable to participate in the expensive and complicated process of presenting their cases to venture capital firms based on the coasts. To address this market failure, Wisconsin has established several programs to encourage the formation of local venture and angel capital groups and incentives for in-state equity investment.

A recent report from NorthStar Economics, in cooperation with the Wisconsin Technology Council and the Wisconsin Angel Network, suggests that these equity programs are working well. In 2006, early-stage risk capital activity reached $102.9 million, a 54 percent increase over the previous year. This early-stage activity includes investments by angel networks, individual angels, informal angel groups and early-stage fund investments. To put that in perspective, the Center for Venture Research at the University of New Hampshire reports that angel investing in the U.S. increased only 11 percent last year.

The life science/biotech industry posted the most gains for Wisconsin early-stage investments, growing from $23.9 million in 2005 to $35.7 million in 2006. The number of deals, however, fell from 17 to 13, meaning the average size of an early-stage biotech deal nearly doubled. Energy also experienced an early-stage investment boom, receiving $14.7 million and displacing information technology as the second most popular industry for investment in the state.

Tom Still, president of the Wisconsin Technology Council, told the Milwaukee Journal Sentinel that he credits much of the state's progress in attracting angel capital to measures introduced in the past few years that target early-stage investment. In 2004, Gov. Jim Doyle created a number of programs under the Grow Wisconsin Initiative (see the April 26, 2004 issue of the Digest). Current programs include early-stage angel investment and venture capital tax credits, technology assistance grants to help businesses pay for third party services used to acquire private investment, and technology venture fund loans to help businesses search for angel or seed investment. The angel tax credit, which provides $3 million annually in credits, has allowed Wisconsin to collect more detailed information about angel investment within the state.

Additionally, the Wisconsin Angel Network, created in January 2005, has provided investors and entrepreneurs with information and networking opportunities to increase the volume and quantity of investment over the past two years. The network is a public-private initiative operated by the Wisconsin Technology Council, which also offers a number of other programs to improve the state's venture market.

Though Wisconsin actually rose two spots in the national rankings, venture capital investment overall in the state was down $8 million in 2006. The state now ranks 33rd in the country, despite the setback. In the Sentinel article above, Still attributed the small decline to a fund-raising year for several of the states’ larger venture firms. Last year, however, also saw the formation of several new venture funds in the state, which Still feels bodes well for future growth in the industry. Healthy growth within the early-stage market also should provide more high-quality opportunities for later-stage investment down the line, Still concluded.

Read Risk Capital in Wisconsin: A Progress Report for 2006 at: http://www.wisconsinangelnetwork.com/uploads/ReportingMetrics/RiskCapital2006Report.pdf

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Recent Research
Can Geography Explain the US-EU Innovation Gap?
What are the main reasons the innovative output of one locale differs from another? If one wanted to explain the differences in patent production between two states, it may be reasonable to look at metrics such as the amount of R&D investments by each state, and the number of employed researchers in the state’s workforce. In other words, one can investigate how inputs to innovation affect the outputs of innovation.

Taking this discussion a step further, what if the physical organization of these inputs within a locale also influences the development of innovation? That the differences in the spatial organization of these inputs, also referred to as the economic geography, can also explain the differences in the generation of innovation is the topic of a recent working paper by Riccardo Crescenzi, Andres Rodriguez-Pose, and Michael Storper.

The Geographical Processes behind Innovation: A Europe-United States Comparative Analysis explores whether or not the "innovation gap" between the U.S. and the European Union (E.U.) can be explained by the differences in their economic geographies. Differences in the intensity of publications, citations, and patent production between the U.S. and E.U., the authors suggest, are indicators of the significant disadvantage of the E.U., and the ever-widening technology gap between them. The gap, they claim, is due in part to the dissimilar historical development of their innovation systems, and structural differences, such as the quality and quantity of R&D resources and the system of higher education. The gap also can be attributed to the spatial distribution of the inputs of innovation, including the mobility of capital, people, and knowledge.

The authors believe because of the ease of mobility in the U.S., the mechanism of the agglomeration of research is different than in Europe, where institutional and cultural barriers throughout the E.U. prevent the maximization of benefits from "external economies and localized interactions.”

By building a model based on patent growth for the metropolitan areas and regions within the U.S. and E.U., they find that the generation of innovation in the U.S. usually occurs in self-contained geographic areas that rely on human capital mobility and localized R&D. In contrast, the process for a region in Europe is more dependent on proximity to other innovative areas and inter-regional knowledge spillovers.

Even though the E.U. has less mobility, less specialized regions, more national institutions, and more diverse cultures than the U.S., Europe may be carving its own unique path, developing functional equivalents to innovation development that are structurally different than in the American system, the paper concludes. Thus, there may be new methods to improve the innovative production of European system that do not require “Americanization” techniques toward bigger and more specialized agglomerations and increased mobility.

The Geographical Processes behind Innovation: A Europe-United States Comparative Analysis can be downloaded at: http://repec.imdea.org/pdf/imdea-wp2007-13.pdf

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Useful Stats
Federal R&D Spending by State, Per Capita, 2000-2004
The National Science Foundation has released the 2004 results of its annual survey of Federal Funds for Research and Development series. The report provides a breakdown of federal R&D obligations by R&D and R&D plant for federal agency, type of performer, character of work, field of science and engineering, and geography. Estimates for 2005 and 2006 obligations are included for most statistical tables, with the exception of geographic distribution of funds. The most recent data available by state is for fiscal year 2004.

Securing more federal R&D funds captivates significant attention from many state TBED initiatives. Tables 128-131 provide historical data by state from 1985-2004.

To standardize the data to aid in comparisons, SSTI has prepared a table presenting federal R&D obligations by state on a per capita basis for the five-year period, 2000-2004. California tops the list in real dollars at just over $19 billion but falls to 10th overall on a per-capita basis. The District of Columbia, however, leads the states on a per-capita basis at $5,473. Second place is Maryland's distant $2,275. At $1,756 in third, New Mexico, home to two large Department. of Energy labs, is the only other state to exceed $1,000. Virginia took fourth place ($853) and Massachusetts fifth ($831). Alabama, Connecticut, Alaska, Mississippi and California round out the top 10 for per capita federal R&D spending.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/061307t.htm

The NSF report, Federal Funds for Research and Development: Fiscal Years 2004-2006, is available at: http://www.nsf.gov/statistics/nsf07323/

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Website Launched along with 2007 Report on the Future of the South
Building on past reports calling for higher levels of educational achievement in the South, the 2007 Southern Growth Polices Board Report outlines a three-pronged strategy to aid the southern region in attaining its goal of building a globally competitive workforce. The annual Report on the Future of the South, released earlier this month, labels its new approach "Convene-Connect-Commit," addressing the process in detail.

The report condenses information from many sources to illustrate the status of the Southern workforce. The authors reveal that, in 1980, 16 percent of the nation’s population 25 years and older had attained a bachelor’s degree or higher, compared to 14 percent in the South. However, in 2000, these numbers had risen to 24 percent for the nation and 20 percent for the South. While the percentage of degree attainment is rising, the gap is widening.

Concurrently launched with the report was http://www.enterprisesouth.biz/, an Internet portal to promote and document the development of the southern economy and workforce. The site contains selected education statistics and achievements for the Southern Growth Policy Board’s 14 members, which includes 13 states and Puerto Rico. Also incorporated into the site is a link to the Southern Growth Idea Bank, a database of best development practices from around the South. The database is searchable by the type of program, the geographic scope of the program, and the state in which the program is located.

The report can be ordered for $20 at http://www.enterprisesouth.biz/report.html. The Idea Bank database can be accessed at http://www.southernideabank.org/.

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SSTI Conference Exhibit Space Sold Out
Fantastic Marketing Opportunities Still Available
Excitement for SSTI's 11th annual conference is growing as the entire exhibit space is now sold out - several months before the event. There are, however, several other options available to build awareness of your TBED program and generate beneficial relationships with the nation's top state and regional TBED decision makers at this year's event.

Learn how your organization can join with our current partners to take advantage of this powerful networking and outreach opportunity. Contact Noelle Sheets, SSTI director of membership services, at sheets @ ssti.org to discuss how an SSTI conference partnership can enhance your marketing strategy.

SSTI would like to thank our current 2007 Conference Partners:
Conference Kick-Off Breakfast:

Exhibiting: Conference CD-ROM: Friend of SSTI's Conference:

Award Prize Money AND a Conference Speaking Opportunity
The Trent Lott National Center of Excellence for Economic Development & Entrepreneurship intends to make an award to the researcher or research team that has made the most significant impact on the field of technology-based economic development in the last five years. The chosen researcher will receive an honorarium and present findings at the 2007 SSTI Annual Conference, Oct 18-19 in Baltimore.

Please enter nominations at http://www.trentlottcenter.org/researchaward.htm. Self-nominations are welcomed.

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SSTI Job Corner
Complete descriptions of the position openings described below are available at http://www.ssti.org/posting.htm.

The Edison Materials Technology Center (EMTEC), a collaborative technology development organization, is seeking an assistant director for the Southwest Central Ohio Procurement Technical Assistance Center (SWCO PTAC). The assistant director is responsible for providing counseling effort to the PTAC office in the Columbus region. Other duties include in-depth, one-to-one client government procurement counseling, conducting training events, preparing reports and budgets for funding agencies, maintaining client counseling records, and networking with various commercial and government agencies, as necessary. A bachelor's degree in science or arts is required.

Griffin Analytical Technologies, LLC, a high-tech, high-growth chemical weapons and explosives detection company, has openings for two positions: (1) senior electrical engineer and (2) software engineer. The senior electrical engineer should be able to bring novel ideas to designing and reducing the size of the instrument electronics, using the latest design philosophies and methods. Similarly, the software engineer should be able to develop PC applications using the most up-to-date design philosophies and methods. A bachelor's or master's degree of science in electrical engineering or computer science (or the equivalent), respectively, is required for these positions.

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TBED People

William Archey, CEO of AeA, announced he will retire in 2008.

Clay Blair resigned as chairman of Kansas Bioscience Authority.

Curtis Brown announced that he will resign as executive director of the Mason City Economic Development Corp., effective July 11, to become the economic development coordinator for the City of Ankeny, Iowa.

Georgia Tech's Advanced Technology Development Center has named Jason Burr director of its Savannah office.

Dr. Dean Chang has joined the Maryland Technology Enterprise Institute as the new director of MTECH Ventures.

George Dycio was hired as an economic development specialist for the Lewiston-Auburn Economic Growth Council.

John Gardner will be vice president for economic development and extension at Washington State University, effective July 1. Gardner has been the vice president for research and economic development at the University of Missouri system.

John Griffin has been named acting director of the Ohio Department of Development's Technology Division.

Gov. Jodi Rell nominated Joan McDonald to succeed James Abromaitis as Connecticut's commissioner of economic and community development. McDonald had been a senior vice president with the New York City Economic Development Corp.

Catalyst Connection has named Petra Mitchell as its new president.

Thom Ruhe is leaving JumpStart Inc., a venture organization in Cleveland, to become director of online initiatives at the Ewing Marion Kauffman Foundation.

John Schaerer is the new director of technology development and transfer for Chattanooga's Enterprise Center.

President Bush nominated William "Woody" Sutton to replace Albert Frink Jr. as the country's manufacturing czar.

Karl Tueller announced he will step down as executive director of the Idaho Department of Commerce Office of Science and Technology, effective July 1. Tueller also serves as a deputy director for the agency.

Nicole Witherbee has joined the Maine Center of Economic Policy as a federal budget analyst and communications coordinator.

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